Toronto's aging bank towers undergo biggest renos in their history in face of competition from south of the tracks

For decades now the iconic TD Centre and its band of banking neighbours near King and Bay Sts. have been considered Canada’s top “Triple A” address.

Now that they’re getting middle-aged, they’ve got competition.

And it’s coming from the other side of the tracks — the Railway Lands

Some 1.7 million square feet of soaring, sparkling, environmentally friendly new office space now stands, and almost 6 million square feet more is planned, for what’s being dubbed “the south core.”

Those new Railway Lands towers have not only won rave reviews, they’ve proved to be the catalyst for the biggest facelift of Toronto’s famed financial district in the city’s history.

A number of Toronto’s landmark bank towers are now swaddled in scaffolding as they undergo a combined $300 to $400 million in refurbishments that include everything from updating their aged food courts to, in the case of First Canadian Place, replacing its almost 40-year-old marble façade.

“The trophy towers are getting to that 30- and 40-year-old mark so they are hitting the gym again, so to speak, and getting into shape because they realize they aren’t the only game in town anymore,” says John Peets, vice president of leasing for Oxford Properties.

Oxford, the real estate arm of the OMERS pension fund, announced in October that it’s teaming up with the Canada Pension Plan Investment Board to do what would have been unthinkable a decade ago.

They’re building a 30-storey office tower between Bay and York Sts. that will become the new domestic banking headquarters for the Royal Bank of Canada.

The move of some 4,000 employees to the waterfront, slated for the end of 2014, will come just five years after Oxford became one of the first major financial district landlords to launch a massive remake of the gold-tinted Royal Bank Plaza at Front and Bay St. which will remain the bank’s corporate headquarters.

“If you want to stay current, if you want to attract new tenants, you have to have spit and polish on your building, it has to shine otherwise you are going to be passed over for someone who is more current,” says Peets.

Increasingly, the handful of pension funds and real estate companies that own the major bank towers, are realizing it’s critical to go green.

Most of the renos are aimed at helping the financial towers, the first of which was built in the 1960s, achieve so-called LEED certification — an internationally recognized acknowledgement that the building is energy efficient and environmentally sound.

Royal Bank Plaza was the first bank tower to achieve that status in Toronto.

TD Centre hopes to win LEED certification on all six of its buildings by 2013, says David Hoffman, general manager of the buildings for landlord Cadillac-Fairview.

That’s meant about $110 million in major work just on the Mies van der Rohe-designed 77 King St. W. building where 45-year-old windows were replaced at a rate of about three or four floors per night.

“The work we’ve undertaken at 77 King is the most complicated and sophisticated work that the TD Centre has ever seen,” says Hoffman. “We’re doing it so that TD Centre can retain its position as the pre-eminent, first-class office tower in Toronto.”

The new windows have not only helped better regulate office temperatures, they’ve cut energy costs and increased TD’s ability to compete for tenants who are increasingly looking for landlords that do more than just talk about sustainability in vague mission statements.

“I know that tenants seek out landlords with LEED certification or green initiatives and much of the young talent coming out of schools these days seek employers that have green programs and sustainability policies,” says Hoffman.

In fact, so much refurbishment is now taking place in Toronto’s financial core, it’s outpacing new construction, says John O’Toole, executive vice president of commercial real estate brokerage CB Richard Ellis.

“In the last five years we’ve seen a fundamental change in the way office buildings are designed, constructed and operated. There’s a big shift toward buildings that sustainable. It’s spurring on the owners of these older buildings to catch up.”

In fact, that’s been eased along by the fact 10 major tenants — from financial services companies to major law firms — have moved to newer buildings, most on the Railway Lands, as their leases came up in the financial core, says O’Toole.

In some cases, it was as much about economics — cheaper rents — as the environment.

That exodus left some bank towers up to 40 per cent empty and gave them much-needed breathing room to carry out major work before recruiting new tenants.

“This has been a gigantic undertaking,” says John Arnoldi, managing director for the GTA of commercial brokerage Colliers International. “Part of it was the competition from south of the tracks, but they absolutely had to do something to maintain the quality and the rents expected at the Triple AAA tower level.”

It’s also allowed the tried-and-true to try something new.

Hoffman is looking forward to spring when the TD Tower will boast an entirely new kind of green, meant to capture heat, cut cooling costs, act as a sound insulator and reduce storm water runoff.

That’s when an almost 22,000-square-foot “living roof” of Creek Sedge Grass will be planted for the first time atop the two-storey TD Bank Pavillon.

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